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Consumer surplus and CES demand

ten Raa,Thijs
Abstract
This article presents the consumer surplus formula for constant elasticity of substitution (CES) demands. The formula is used to compare the monopoly and optimum provisions of product variety. It is shown that a monopolist under-provides variety. This result is contrasted with Lambertini’s analysis of the monopolist’s optimal R&D portfolio. I also contrast my approach with the indirect utility technique of Anderson, de Palma, and Thisse’s discrete choice theory of product differentiation.
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Date
2015-10
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Tilburg University Research Output Collection
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Keywords
D61 - Allocative Efficiency ; Cost–Benefit Analysis, L12 - Monopoly ; Monopolization Strategies
Citation
ten Raa, T 2015, 'Consumer surplus and CES demand', Oxford Economic Papers, vol. 67, no. 4, pp. 1165-1173. https://doi.org/10.1093/oep/gpv035
URI
https://hdl.handle.net/20.500.14602/64246
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